Chris Byrnes – ByrnesMedia
Vision Critical released some interesting research on 9 April conducted recently amongst 3,021 on-line consumers aged 18+ in Canada, Britain and the USA. These are engaged on-line consumers – the trend setters and the early adopters who are often one step ahead in their digital behaviour. While no one can accurately predict the future we can, at least, get a glimpse into what might happen, and certainly track the significant changes in media consumption. This study focused on radio’s future in three countries and set out to provide an overview of the evolving audio landscape for broadcasters, webcasters and other industry stakeholders. It asked about how people are consuming the media, and also tracked changes over the past few years.
I spoke with Jeff Vidler, the Senior VP and Managing Director of Vision Critical about this research and I’d like to share some of that conversation as I think it might be helpful to the radio industry. “This is yet another study that pegs the average weekly use of AM or FM radio at 91% in Canada which is one of the highest in the world. By comparison, weekly listening to radio in the UK is 77%, and 86% in the USA,” says Vidler.
Radio plays a significant role in the daily life of the average Canadian: On the whole, online consumers in both Canada and the USA confirm that broadcast radio plays the same role in their lives today that it did a couple of years ago. 76% of the 1,001 Canadians surveyed said that radio was playing a bigger role or about the same as compared to two years ago.
What is interesting is that consumers in the UK are even more likely to feel that radio now plays a bigger role in their lives. There could be many reasons for this and some include that the UK radio industry is still developing and is not as sophisticated as in Canada and the US. Also the English tend to adopt new technology quicker; DAB, Internet-only set tops, and Listener Driven Radio are just a few examples where Great Britain has led the charge. “The challenge for Canadian broadcasters is to find ways to engage the younger listeners, and those Canadians who said radio was more important to them were more likely to be older than younger,” says Vidler.
How are new audio alternatives impacting radio usage: At this point, usage of new media appears to be complementary to broadcast radio. “We do need to keep in mind that this survey was conducted with the on-line community who are more likely to listen to podcasts or other streaming services, so it is encouraging that this group who has lots of alternatives is still very high on terrestrial radio,” says Vidler. Radio does the best job of playing music that people want to hear, and blending in enough of the other elements, such as personality, news and local information that appeal to a mass audience. However, it should come as no surprise that listening to music on a digital device such as an iPod, or mobile phone is growing in Canada with 46% of those who use an mp3 or digital music device saying that these devices are now playing a bigger role in their day to day lives.
In the USA, Pandora is gaining traction where more than 1 in 4 listeners to web-only radio or streaming services named Pandora as their favourite on-line music service. Canadian consumers are largely unaware of the product because it is blocked to users outside the USA because of licensing constraints. Pandora started in 2000 and builds a “station” based on the user’s favourite song or artist. It then recommends other music that is similar in style and texture and allows the user to fine tune the playlist. Users can build up to 100 personalised radio stations. By the way, Tim Westergren, the founder of Pandora, has indicated that he may bring the service to Canada in the future, but is clearly focused on making the American model a business success first. Pandora says they are now making profits so one assumes they have racked up some large losses over the past 10 years. Creating a Canadian version of this service would seem to be a real opportunity for a large enough player who could offer a quality product and make enough noise to motivate consumers to try such a service. In England there is a similar service called Spotify which has 11% of the market, based on this research. In short, no on-line service dominates in Canada at this point, with YouTube getting a 9% recognition when Canadian consumers were asked if they could name an on-line music streaming service they had used in the past year.
Internet-only audio services: 80% of those who listen to these services say they are listening either more or about the same to Internet-only radio stations. Internet-only stations appear to be the most popular in the US with 26% having listened to one of them in the past week, but that may be largely because of Pandora. The music rights issues are still to be settled south of the border and this level of uncertainly and possible exposure forced a lot of very good Internet-only operations to go dark. In Canada only 10% said they had listened to such a station in the past week, which was less than the proportion who had listened to Satellite Radio at 12%.
How is Satellite Radio doing in Canada today: Based on this research the future does not look great for satellite radio, simply because it is not seeing the growth – even after the two providers merged. The slump in the North American economy has not helped as people tightened their budget and found things they could live without. Slumping cars sales have also hurt satellite radio, as the number of vehicles rolling off the production lines fitted with satellite receivers has dropped. What we are seeing is that people are not coming to satellite radio for the music; it is personalities such as Howard Stern who provide a form of entertainment listeners cannot get anywhere else and they are prepared to pay for it. Unless satellite radio can find a few more Howard Sterns, their growth opportunities are very limited and this will not pose much of a threat to terrestrial radio. Both Sirius and XM have mobile applications for both Blackberry and iPhone, but they are subscription-based services which will limit their appeal, especially when there are so many great apps available for no cost.
Consumption of radio and audio on mobile media: While web-only radio apps are a big deal in the USA, in part because of the cool app that Pandora offers on five of the most popular mobile devices, in Canada the on-line consumer is more likely to listen to their favourite terrestrial radio station while they are on the go. This is more great news for Canadian broadcasters because at this point only a few Canadian stations are offering their listeners the opportunity to make radio portable once again.
Smart phone usage in Canada is on the rise with 29% of the online consumers in the study confirming they use one. What is encouraging is the number of smart phone or iPod Touch users who say they have downloaded a broadcast radio station application—24% of Canadians vs. 20% who have downloaded an app for web-only radio/streaming. So, if your station is not yet on this platform call ByrnesMedia to find out about our iPhone application for your radio station. The Apple iPad goes on sale later this month and that will also create lots of opportunities for radio stations to provide applications on this platform so listeners can enjoy their favourite radio station while surfing the web or reading an eBook.
HD Radio: HD radio is still largely unknown by the average American consumer. Only 26% of online Americans confirmed awareness of HD radio and only 9% know anyone who actually owns an HD radio.
What are the opportunities for radio: Radio is well positioned to offer consumers what they want when they want it for three reasons. They already have the advertiser relationships; they have strong local brands; and they have large audiences. However, broadcasters need to take advantage of these benefits and quickly find ways to give listeners what they desire and find ways to generate revenue from it. Here are some suggestions that came out of the research:
On Demand: 53% of those who had listened on-line said they were interested in a service where they could play songs on demand. This technology is available today, but the challenge is finding a viable business model while meeting all the royalties and music rights fees. Radio, more than any other business, has all the tools, the know-how and the talent to put something like this together, but no one has worked out how to make a profit doing this.
Customization: 37% said they were very interested in a service that offered a wide range of channels which the user could customize by promoting or deselecting artists. This is what Listener Driven Radio does, in that it allows the end users to determine what songs will play on the radio and listen to music on demand, and gives listeners the opportunity to vote a song up or down the playlist. This voting tool is one of the reasons why Pandora has been so successful, by the way. If you want to learn more about this technology, go to our website at www.ByrnesMedia.com and click on New Media.
True Interaction: Giving listeners ways to more easily interact with the radio station is also another key benefit consumers are looking for. Frankly, they are not impressed with most radio station websites and find them hard to navigate and lacking the tools that allow the user to customize their experience and preferences. Also, most stations have not ensured their websites look good and function properly on the mobile platform.
Music Experts: Almost 25% of those surveyed who have consumed music on-line in the past month said they would listen to a radio station where the music mix was designed by a music expert. This may create an opportunity to run a specific show or even make a personality out of your Music Director.
“Designing new products and services that deliver key benefits via IP and mobile devices is clearly an opportunity and radio is better positioned to do this than any other business out there” says Vidler. “Consumers are looking to personalize their music streaming experiences; they are looking for on demand functionality, and they want user-friendly interactive mobile applications that live on their smart phones.”
Just as many on-line consumers say that radio is playing a bigger role in their lives over the past two years as say it is playing a smaller role. However, the greatest growth opportunities are likely to come from other audio platforms and services. So take some time to think about how your radio station can meet the needs of your audience and how you can make your product more portable and more interactive. If you can do this and also generate a profit then I predict your future will be very bright.
Thanks to Jeff Vilder Senior VP of Vision Critical who provided this research as well as some additional information for this article. You can reach Jeff at jeff.vidler@ visioncritical.com or www.visioncritical.com.